Intel quarterly chip discounts due

Like clockwork, Intel(INTC) plans to announce its quarterly price cuts April 28, and Wall
Street has myriad estimates on how far it will go.

The market, however, is largely betting the cuts will be steep and affect the chip giant's profits. Intel was the most actively traded stock on Nasdaq today, closing at 130-1/2, down 6-3/4 over yesterday. The company also saw 24 million shares trading hands.

"We estimate there could be a 25 percent cut for the Pentium Pro
[family]," Montgomery Securities analyst Jonathan Joseph said.

But Wasserstein Perella Securities analyst Stephen Dube said the cuts may
be focused more on the low-end Pentium "classic" microprocessors. "Their
high-end market is doing well and there are reports of shortages of the
high-end Pentium Pro processors."

Intel historically has made quarterly price cuts of 20 percent in an
effort to move sales or reposition itself against competitors, Dube added.

Last January, Intel slashed prices on its Pentium Classic microprocessors
by a much as 35 percent. Its 166-MHz Pentiums, for example, were cut to $295 from $402, a 26 percent drop.

Meanwhile, Intel's MMX multimedia-enabled chip may see some cuts as well,
analysts said. Dube said Intel has a history of rolling out cuts several
months after a new product debuts and that the lower-end 166-MHz MMX
processor may again be due.

Intel also cut its 166-MHz MMX chip prices by 12.5 percent to $356 from
$407 last January.

Cyrix demonstrated its MMX-enabled M2 processor at the
Windows Hardware Engineering Conference in San Francisco last week. The M2 is scheduled to be officially announced in May or June. Meanwhile, AMD has
begun shipping its MMX-capable K6 chip to PC makers, which are expected to
roll out systems with the new chip in the coming months.

"AMD may be forced to make cuts themselves that may go as low as 30 to 40
percent," Joseph said.

Intel spokeswoman Luanne Darbonne said the chipmaker will not comment on
its pricing plans until they are out April 28. "We don't price our
products on the immediate changes in the industry," she said. "When we
price our products, we look at a number of elements, such as the life cycle
of a product."

She noted, though, that Intel provides for "serious" consideration
of a competitor's imitation or alternative-architecture product.

Dube said it's a hard call whether Intel will immediately drop its MMX chip
prices in response to its competitors. He added Intel may want to wait
another quarter since it will take time for AMD to ramp up its product
line.

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